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May 2023

May 2023 » Market Analysis » NY New Developments

May 2023 New York New Developments

New Developments:

The MTA launched eminent domain proceedings for nine sites in East Harlem. The MTA plans on demolishing existing buildings to make room for some heavy machinery to extend the subway from East 96th Street to East 125th Street. The staging ground at East 116th Street will ultimately become a subway entrance for the extension.

A collapsed Lower Manhattan parking garage had open violations. The Manhattan DA is investigating the incident that killed one. The partially collapsed building at 57 Ann Street racked up dozens of violations for decades. Four of those violations remained open when the building, owned by Western Carpet and Linoleum, partially crumbled earlier this week.

Rent Guidelines Board staff recommends the largest rent hike in 30 years As landlords’ operating costs increased dramatically last year, 8.5% on one-year leases for rent-stabilized apartments and 16% for two-year terms. If approved, those bumps would mark the largest rent hikes since 1989.

City to fund repairs to vacant rent-stabilized apartments with a $25K-per-unit pilot program. The “Unlocking Doors” initiative will provide up to $25,000 per unit to owners of vacant, rent-stabilized apartments that need work to be re-rented. $10 million pilot program to help landlords repair vacant, rent-stabilized apartments. dedicated the City Fighting Homelessness and Eviction Prevention Supplement, or CityFHEPS. The pilot program is expected to include 400 apartments.

Some $271 million of that is CMBS debt that went to special servicing in February, and $93 million is mezzanine debt, split between an A and B note.

Blackstone is current on the loan being sold with the Income from 11 Manhattan multifamily properties. As of March, the ratio had slipped to 0.87, indicating the portfolio’s revenue is only covering 87% of its debt service. Factoring in the mezzanine loan, the DSCR is just 0.58. The buildings are at 250 West 19th Street, 31 East 31st Street, 344 East 63rd Street, 434 West 19th Street, 309 West 30th Street, 337 West 30th Street, 345 West 30th Street, 162 East 61st Street, 425 East 84th Street, 445 East 83rd Street and 451 East 83rd Street.

Without state action, New York City’s housing goals are sunk. Mayor Eric Adams appealed to a crowd of some of the biggest names in city real estate to help revive it. “If we don’t get 421a, then we cannot build affordable housing”. “ If the state does not lift the city’s residential floor area ratio cap”, he said, then the city can not move forward with its hopes to convert millions of square feet of office space into housing.

Occupancy across SL Green’s 25 Manhattan buildings dropped to 90.2% in the first quarter. That was a decline of 280 basis points year-over-year, nearly twice the rate of decline from 2021’s first quarter to 2022’s first quarter.

Brookfield is struggling to refinance properties in the rising rate environment, and devaluation of office properties after reduced occupancy.

Construction prices are lower today than they were a year ago, a little bright spot for the industry.

Construction and nonresidential construction inputs saw 0.9% and 0.6% decreases, respectively. Building costs are still 39.5% higher than they were in the month before the pandemic.

Falling costs were fueled by energy price drop-offs natural gas, which saw a 21.4% decrease. Crude petroleum saw a 10.2% decrease and unprocessed energy materials saw an 11.9% decrease.

A 25,000-seat soccer stadium for the New York City Football Club is coming to Queens. A rendering of the planned NYCFC soccer stadium and surrounding development has been created. HOK and Turner Construction have been selected as the project’s architect and general contractor, if approved via the city’s land use approval process later this year.

New York City’s industrial real estate market remains healthy, but it's pandemic boom appears to be coming to a close.

Only 730,000 square feet of industrial space was leased in the first quarter. The total is less than half of the 1.5 million square feet leased in the fourth quarter and down 25.6% from the three-year quarterly average.

Construction on industrial space is slowing. There were 12 properties in the midst of construction during the first quarter, spanning 5.8 million square feet. The square footage volume being constructed declined 19.9% year-over-year.

A state appellate court agreed to evict a rent-regulated tenant at 1651 First Avenue. The tenant and other holdouts had caused Extell Development to design around their buildings. In November 2021, Extell filed plans for a 22-story building featuring 543 apartments and commercial space. In a unanimous September ruling, appellate judges found that the state Division of Housing and Community Renewal’s decision “was an error of law and was arbitrary and capricious.”

Donald Trump indictment on criminal charges and or a a conviction could throw a wrench into the Trump Organization’s on his abilities to obtain new or renewed. An indictment could put Trump in violation of a loan, allowing the lender to force him to pay up or refinance the note. Government agencies, licensees or business partners may be able to exercise a negotiated clause that allows them to terminate contracts for cause. If Trump is a managing member of a partnership, he could be asked to step down. A conviction would make it hard for any real estate developer, let alone Trump, to continue doing business as usual.

Eli and Isaac Chetrit along with the Sioni Group are planning a 69-story, 743-foot-tall condominium at 989-993 Sixth Avenue. Construction and financing is not yet in place.

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